Shares in Elan rose sharply yesterday as another pharmaceutical company received approval from US regulators for a drug that uses its proprietary technology.
The shares also got a boost from a research note from NCB Stockbrokers which suggested that the problems with its multiple sclerosis drug, Tysabri, were due to its use in combination with another therapy, Avonex.
In Dublin, Elan shares closed 52 cent, or more than 9 per cent, higher at €6.10 while in New York, their main market, they added 4.4 per cent to $7.12.
The stock was helped by news that Par Pharmaceutical had won approval for Megace ES, a weight loss treatment. The drug was developed using an Elan drug delivery system. Meanwhile, in a note published yesterday, NCB Stockbrokers said it believed that Tysabri may have led to the death of two patients because its interaction with Biogen Idec's drug Avonex led to a build-up and overdose of the medicine.
According to NCB, use of Tysabri with Avonex led to almost double the intended Tysabri concentration after only 20 weeks of treatment whereas patients on Tysabri alone did not accumulate the drug.
The effect of Avonex on Tysabri is likely to form a central part of the case made to the US regulator, the Food and Drug Administration (FDA), for the re-launch of Tysabri, NCB believes.
The broker is predicting Tysabri will return to the market next year and achieve 10 per cent market penetration by 2009.
"This level of market penetration can support a revenue potential of around $1 billion for use in multiple sclerosis alone, implying a sum-of-the-parts value of $9.74 to $11.95," NCB said.
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